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Fidelity Investments may layoff 4000 employees
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by Tina Kells | October 28, 2008 at 10:48 am
8311 views | 1 Recommendation | 10 comments
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As the Wall Street crisis deepens many financial companies are considering ways to cut their losses. One way to lower the bottom line is to layoff employees. Fidelity Investments stated yesterday, that it has considered workforce reduction as part of its cost cutting measures, but stopped short of confirming that it would layoff 4000 employees.
An anonymous source linked to Fidelity executives says that the company plans to cut thousands of back-end jobs in two rounds of layoffs. The unidentified whistle blower claims that 1,500 jobs will be cut by the end of 2008, with an additional 2,500 people being let go sometime in 2009.
Fidelity Investments acknowledged yesterday it is studying cost cutting but declined to comment on an industry report that it plans to lay off up to 4,000 employees as plunging stock markets cut into the value of its mutual funds business.
The online trade publication Ignites.com, citing unidentified sources, reported yesterday that Fidelity plans two sets of layoffs in the coming weeks: 1,500 before the end of the year and another 2,500 early next year. The job reductions would be focused on back-office staff, Ignites said.
A person who has spoken with Fidelity executives involved in the planning confirmed to the Globe that the firm is considering cutting up to 4,000 people, but said those reductions would come throughout the company, including employees who work with customers and in its core mutual funds business. At any investment company with declining assets, "there has to be some type of adjustment," said this person, who also requested anonymity because of the sensitivity of the situation.
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at 08:06 on October 29th, 2008
Will India work force also be reduced ? Thinking logically...As They save lots of dollars by outsourcing the work to india ...India IT would be a great save for them for sure..
at 13:22 on November 6th, 2008
Outsourcing is not an answer to the problem. The work should stay in America; where it belongs. It would not be beneficial for Fidelity to continue outsourcing as Americans are tired of it. If they continue outsourcing, the negative publicity could lead investors to invest with companies who do not outsource. Backing outsourcing was one of the reasons John McCain did not become our next President. There are a multitude of ways to cut costs. I hope Ned Johnson puts America first. Our country and world are in dire straits due to greed and the seeking of more money by putting ethics and morals as an afterthought.
at 15:09 on November 6th, 2008
My experience in IT at Fidelity has been that India has cost us far more than it has saved. Fidelity now estimates that an India resource costs as many $$ as a US resource, but productivity is far lower in India. For every 1 IT person in the US that is let go, 4 in India would become worthless.
at 21:14 on November 6th, 2008
Per my understanding and knowledge Fidelity has decided that it would cut down its workforce in India as well by 15% to 20% of its over all strength. Which means that would be some layoff in India as well but without any questions this would benifit the vendors working for Fidelity. Which will see a growth in the coming days.
This would take some time hope we all are there by that time and still be bothered by this.
at 09:47 on November 8th, 2008
Lets understand the economics of outsourcing. If US companies who wants to be multinational and want to improve profitability of its business and want to compete with Korea and Japan in Automobiles, IT Services with India and China, Textiles with numerous developing countries, electronics with Korea, Japan and China etc then they have to produce goods and services at a lower cost than those companies in mentioned countries. Outsourcing is done to India, Malayasia, China, Phillipines, Mexico and Poland because the companies belong to Korea, Japan, China etc have facilities in those places and provide goods and servces at a lower cost.
Its politically correct to say no outsourcing, but without that will the American consumer willing to buy only American made products at a higher cost than Korea, China, India made products. US can also put import duty on overseas products to make local products cheaper and saleable. But that will lead US to follow what was being followed in closed economies of Russia, East Europe ( Communist regimes). We know where communist closed economies have gone finally.
Anyways US is democracy so people will decide whether to take up the challenge with the world or move towards a closed economy.
at 18:40 on November 11th, 2008
I also agree with fidelityITguy on the point that the true cost of offshoring is higher than the hourly rate
of the offshore resource.
I also work for Fidelity Investments, and have seen all of this first-hand over the past few years.
We actually pay for flights to and from the US from India, pay for the hotels or
appartments during these extended work visits, and more.
Every offshore person has needed some onshore counterpart from the US to help coordinate items from meetings to
requirements to helping with production support issues.
Some of our offshore production support is little more than an operator at a switchboard, passing open tickets to
the US support ( waking them up for even some simple matters ).
Development has been poor, with many efforts needing revisiting for problems that should have been caught before
production release. In many cases, a large percentage of the actual development has been actually done by sympathetic
US counterparts who are working 70+ hour weeks helping to support the offshore developers in addition to their
normal work day. This involves being able to be woken up in the middle of the night to be asked development questions.
Salaries are rising for the IT developer, in many cases, I have heard nearly a 20% increase per year over the past 2 years for average salary increases. Dual management reporting structures are also needed to support this workforce.
New work titles have been created so that developers now report to a "titled" lead person. This is due to the need
of having someone in power or actual title being able to tell others what to do ( if at the same peer level, often
the peer does not feel they need to do the requested work or that their peer has any authority ove them ).
The original response is an example of the poor attention to detail that is often seen. This is from the lowest level
developer to even project lead and even higher levels.
Imagine if you will, that the below response was an email to a business user asking for further clarity on a requirement.
The below response is very similar to what we see day in and day out in our area. And nothing is ever done to improve
the quality of communication. It is just accepted and tolerated.
I have made a few comments enclosed within "<*" and "*>" characters.
~~~~~~~~~~~~~~~~~~~~~
<*Let's*>
Lets understand the economics of outsourcing.
If US companies who
<*want to be (not wants with plural companies)*>
wants to be multinational and want to improve profitability of its business
and want to compete with Korea and Japan in Automobiles, IT Services with India and China,
Textiles with numerous developing countries, electronics with Korea, Japan and China etc then
they have to produce goods and services at a lower cost than those companies in mentioned countries.
<*huge run-on sentence*>
Outsourcing is done to India, Malayasia, China, Phillipines, Mexico and Poland because the companies
belong to Korea, Japan, China etc have facilities in those places and provide goods and servces at a
lower cost. <*and lower quality for IT services. There is a vast difference between a shirt vs custom IT code that needs to be absolutely matching the business requirements.*>
<*It's*>
Its politically correct to say no outsourcing, but without that <*,*>
will the American consumer willing <*be willing to buy (not just willing)*>
to buy only American made products at a higher cost than Korea, China, India made products. <*question mark vs period*>
US can also put import duty on overseas products to make local products cheaper and saleable. <*saleable? not a word*>
But that will lead US to follow what was being followed in closed economies of Russia, East Europe
( Communist regimes). We know where communist closed economies have gone finally.
<*quite a stretch of a point: no outsourcing = Communisim *>
Anyways US is democracy so people will decide whether to take up the challenge with the world or
move towards a closed economy.
<*The challenge with the world economy is actually getting what you pay for and making others see the true cost of this.*>
at 10:24 on November 15th, 2008
I donot know about Fidelity IT team, but generalising about all IT teams is not the correct thing.
Also the issue is not just Outsourcing of IT services, but 'Right sourcing' of all products and services. Companies in open world will move to places where they will get cheap resources. There have been movements between different US states, and will happen more now around the world. Companies cannot be supported by governments for long. Ford, GM and Chrysler are bleeding, but Toyota, Hyundai or Suzuki doing far better. HP, Dell and Intel is bleeding but Lenovo and Acer doing much better. US airline companies are suffering but companies like Cathay Pacific, Emirates and Singapore Airlines are doing good. We need to open eyes to understand the new world and its policies. Correcting english grammar may not be enough, who knows we all have to learn Chinese after few years to survive.at 20:43 on November 15th, 2008
It is right that salaries are rising for IT developers in India but still they are much less compared to US Salaries ( In India the base salary: USD 1000 per month, Inflation at 11% compared to US Inflation of 4%).
The salaries are rising because without that the people will change the job.The cost of living is becoming higher.
I think this is not a case of US vs India, but how Indian structure can help US to do better business in a cost effective manner. No Indian is happy to know that a fellow US colleague has lost his/her job, as Indians know better than anyone what financial problems mean. Most Indians like to go to US and work and not to Russia, China or many other countries, because in US they get the mental peace and freedom, all because of the kindness and friendliness of US citizens.Hence an Indian would never like to see a fellow US citizen suffer because of him.
I feel now we need to work together more to save ourselves from the crisis and not do things that divide us.
at 23:23 on November 23rd, 2008
I'm sorry, India IT Guy, but I recently left Fido IT and the outsourcing solution there is a disaster. I'm sure that a well thought out, logical solution that included outsourcing could be benefitial but that is not what happened at Fido. A decision was made that a certain percentage of IT work was going to be done overseas, and each group was given a "budget" of work to outsource ... regardless of whether it made sense for that group.
No accountability was put into place, so when the same mistakes were made ... over, and over and over again ... it fell on the local resources to clean up the mess because our bonuses were at stake. I don't blame the overseas techies. If you created a team of US techies and didn't make them accountable for their mistakes, a number of them would take advantage of the situation and get lazy. It is not a cultural thing. It is called being human. The reason that leaders/managers are needed is because many people, if not held accountable for their performance, will not perform. I consistantly tracked and reported mistakes and lapses in the work coming from overseas. The mistakes and lapses kept coming. Luckily, I got frustrated and took a job with another company before the market crashed.
at 18:06 on December 20th, 2008
Someone in this blog asked if India will be affected...
We now have our answer with Fidelity acknowledging they are " selling " off their India IT division...
Say good bye to 2000+ jobs dear friends in India - they have now stuck it to you as they are sticking it to us (if you think the purchasing firm will keep around for much longer than a year, you're smoking some powerful stuff)... I guess Ned and Abbey, with estimated net worths of around $35 billion combined, are not bringing home enough cashola to make ends meet... Time to dis-assemble the company, piece meal at a time...